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2016-07-20

Electrolux: President and CEO Jonas Samuelson's comments on the results for the second quarter 2016

Significant earnings improvement

Electrolux operating income for the second quarter increased
significantly compared to the same period previous year and amounted
to SEK 1,564m. Of the Group's six business areas, four achieved an
operating margin of above 6%. The improvement was particularly strong
in Major Appliances EMEA and Major Appliances North America. Major
Appliances Asia/Pacific and Professional Products showed a stable
development in earnings. Measures to restore profitability within
Small Appliances continued. A continued weak market environment in
Latin America impacted the performance in the region negatively. Cash
flow in the second quarter was at historically high levels and
amounted to SEK 4.1bn.

Earnings continued to improve within Major Appliances EMEA, driven by
higher sales volumes, positive contribution from product portfolio
management and cost efficiency measures. Electrolux continued to gain
market share in our focus categories and premium brands. The
operating margin amounted to 6.4% in the quarter. Market demand for
appliances in Europe continued to grow, increasing by 4%. We now
expect the European market demand to grow by 2-4% in 2016. Following
the Brexit referendum, the outlook for UK demand and the British
Pound is uncertain.

Positive contribution from the product mix and improved cost
efficiency led to a strong recovery in our North American operations,
and our work to enhance efficiencies in the production system is
making progress. The operating margin was 6.5% in the quarter. Market
demand for core appliances increased by 3% in the second quarter and
5% year-to-date. Sales of core appliances declined somewhat, driven
by products under private labels, while sales of products under own
brands increased. We expect market demand for appliances in North
America to grow by 4-5% in 2016.

Market demand for appliances in Latin America remained weak. Demand
continued to deteriorate in Brazil, and also Chile and Argentina
contracted in the quarter. Lower sales volumes and a deterioration of
the mix impacted results negatively, while price increases and cost
reductions partly compensated for continued currency headwinds. At
current currency rates, the headwind is forecast to be less
significant in the second half of the year compared with the first
half. However, we expect the Latin American market to remain weak
also in the second half of 2016.

Earnings in Asia/Pacific improved 11% year-over-year. Growth continued
at a strong pace in Southeast Asia, partially offsetting the planned
contraction in China. This development contributed positively to the
operating margin. In the quarter, we announced the acquisition of
Vintec, an Australia and Singapore-based company which supplies a
wide range of climate-controlled wine cabinets throughout the region.
Vintec has a good strategic fit with our major appliances business
and complements the product offering.

In Small Appliances, the work to restore profitability continued.
Actions to reposition operations and to exit unprofitable categories
and markets continued at a high pace. These measures will continue in
the second half of the year. Professional Products continued to
generate stable operating results and margin.

The focus to achieve stability in all operations globally and to
increase the operating margin continues. These efforts will, together
with the development of innovative products delivering best-in-class
consumer experiences, support cash generation and shareholder value.

For further information, contact Daniel Frykholm, Electrolux Press
Hotline, +46 8 657 65 07 or Catarina Ihre, Vice President Investor
Relations +46 8 738 60 87

This information is information that AB Electrolux is obliged to make
public pursuant to the EU Market Abuse Regulation and the Securities
Markets Act. The information was submitted for publication, through
the agency of the contact person set out above, at 0800 CET on July
20, 2016.

Electrolux is a global leader in home appliances and appliances for
professional use, based on deep consumer insight. We offer
thoughtfully designed, innovative and sustainable solutions,
developed in close collaboration with professional users. The
products include refrigerators, ovens, cookers, hobs, dishwashers,
washing machines, vacuum cleaners, air conditioners and small
domestic appliances. Under esteemed brands including Electrolux, AEG,
Zanussi, Frigidaire and Electrolux Grand Cuisine, the Group sells
more than 60 million products to customers in more than 150 markets
every year. In 2015, Electrolux had sales of SEK 124 billion and
58,000 employees. For more information go to www.electroluxgroup.com

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http://news.cision.com/electrolux/r/president-and-ceo-jonas-samuelson-s-...
http://mb.cision.com/Main/1853/2048553/541943.pdf

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